Mike Larson, Money and Markets columnist and editor of the Safe Money Report, is out this afternoon. Mike Burnick, the manager of investment services at Weiss Research, is filling in.

The people have spoken and Republicans took back control of the senate on Election Day. So now the question is: How will this impact financial markets and the economy?

Well the early results look bullish for America, with the U.S. dollar surging higher and stocks moving up this morning in response. Longer term, I doubt the mid-term election results will fundamentally change much in terms of our economy or runaway deficits in Washington, no matter whether the red team or blue team is in charge.

As my colleague Charles Goyette so astutely observes: “I can’t think of a meaningful difference between Harry Reid’s and John Boehner’s positions on the Federal Reserve and monetary policy … I have to ask what difference this outcome will have on the fundamental issues that determine our Freedom and Prosperity.”

With a Republican Congress and a Democrat in the White House for two more years, expect more gridlock.

With a Republican Congress and a Democrat in the White House for two more years, it still means gridlock, plain and simple. Congress won’t be able to get any major legislation past the White House; and the White House won’t be able to get anything done in Congress.

More of the same in other words, but maybe that’s the best possible outcome.

After all, we’ve had plenty of gridlock in recent years with Republicans already in charge of the House of Representatives for the past two years … and the S&P 500 Index has gained 47.6 percent since Election Day 2012!

If this trend continues over the next two years, then I’m bullish on D.C. gridlock!

More importantly for investors, there’s nothing here that changes the fundamental reasons why trillions of dollars in foreign capital continues to flow into American assets: Warts and all, the U.S.A. is still the richest and most stable nation on earth.

In fact, according to data from the U.S. Bureau of Economic Analysis (BEA) and the Organization for Economic Cooperation and Development (OECD), over $10 trillion of foreign capital has flowed into the U.S. since 2009 in search of better returns.

And the tidal wave of investment in U.S. assets is accelerating; with the biggest capital flows taking place in 2013 and so far this year. It’s easy to see why: Compared with the paltry returns in Europe, Japan and other parts of the world — the investment prospects for U.S. stocks look brighter than ever!

Just consider the dimming prospects in Europe (EU). The EU economy is facing a triple-dip recession, its third economic contraction since 2008! Just look at the facts:

Real economic output in the EU remains three full percentage points below the peak before the 2008 recession, even as U.S. GDP advanced to new highs last year …

Europe’s finances are in dismal shape compared with the U.S. Household debt was higher at the end of 2013 than before the 2008 credit crisis began. And consumer spending across the EU, the lifeblood of its economy, was lower in 2012 than at the peak in 2008.

As a result, deflation has the upper hand across Europe and there is $500 billion to $1 trillion of excess cash sitting in European bank accounts, earning negative real interest rates right now.

“The U.S. still looks like the best game in town to overseas investors!”

Is it any wonder why capital is flowing out of Europe at an accelerating pace, and into U.S. assets! Imagine that you are a European investor searching for the best return … what would you do?

Bottom line: No matter who’s in charge at either end of Pennsylvania Avenue, the U.S. still looks like the best game in town to overseas investors! Which is why foreign capital will keep flooding U.S. markets in search of higher returns.

Some of the money is going into domestic real estate, but property investments aren’t very liquid, as many investors found out the hard way during the real estate bust a few years ago.

Some is flowing into the perceived safety of U.S. Treasuries, but you can’t expect much return at today’s ultra-low yields, and could face big losses when interest rates start rising.

That’s why most of this capital is heading into stocks, not just any shares, mind you, but the most elite companies that have the best balance sheets, the strongest sales and profit growth, and especially the most consistent returns.

That’s my take, but I want to hear your opinion:

Do you think U.S. stocks are the best game in town?

Did yesterday’s election results change your outlook on the U.S. economy and stock market?

While fracking is seen as the future of the U.S. energy sector, voters in a Texas city approved a ban on the process, a victory for environmental groups helping to support the move.

Voters in the town of Denton in northern Texas managed to do what residents of several other cities had failed to do by getting hydraulic fracturing banned in their area. But court battles are sure to follow — the energy lobby in Texas filed for an injunction, claiming that the measure violated state law and infringed on the rights of mineral rights owners. The vote gained 58 percent of the 25,376 votes cast, Reuters reported.

Did you call a taxi? It might not be arriving at your door to pick you up — it might be delivering your latest Amazon.com order. The Wall Street Journal reports that the e-commerce company tested package delivery by taxi cabs in San Francisco and Los Angeles, citing people familiar with the matter.

The move represents Amazon’s latest experiment in regard to package delivery as it seeks alternatives to United Parcel Service Inc., FedEx Corp. and the U.S. Postal Service. As widely reported, Amazon is also considering the use of drone aircraft to deliver packages.

Oil prices rebounded from their recent slump after rumors of a pipeline blast in Saudi Arabia and data showing that U.S. crude inventories rose 460,000 barrels last week, less than the 2.2 million barrels forecast by analysts. Saudi officials said that a fire had broken out during repair work at a pipeline but that it was under control and no terrorism was suspected.

“The Saudi rumor definitely shook things up, given that we’re living in a world full of threats to oil supply. But we did calm down after that and step back and look at the bigger picture of what the inventories meant,” Phil Flynn, an analyst at Price Futures Group in Chicago, was quoted by Reuters as saying.

Good investing,

Mike Burnick

P.S. Yesterday’s election results make it an even clearer favorite destination of trillions of dollars now fleeing conflict and turmoil overseas. And already, they are bidding up the U.S. dollar today.

This is precisely why Martin just completed a very special free video in which he gives you the answers you need most right now! Click here now to view it for FREE!

Mike Burnick, who has over 25 years of professional investment experience, is the Director of Research at Weiss and editor of Options Power Trader. Mike has been a Registered Investment Adviser and portfolio manager responsible for the day-to-day operations of a mutual fund. He also served as Director of Research for Weiss Capital Management, where he assisted with trading and asset-allocation responsibilities for a $5 million ETF portfolio.

{13 comments }

ianWednesday, November 5, 2014 at 5:10 pm

I agree US stocks are only thing with lipstick,keep waiting for a crash but with the money coming in,it could be DOW 20,000 with no major dips.So what do you do,pray for a crash,or pray for it to keep rising.Me.Got a lot in reserve and quite happy making a buck here and there.best of luck

anthony gWednesday, November 5, 2014 at 5:48 pm

Grid lock may be good for stocks. The good seems to be priced in. The real estate in New York may be out of reach for the super rich.

FredWednesday, November 5, 2014 at 7:04 pm

I am not so sure that total gridlock will remain as premised here. Over the last several years, Roadblock Reid has stuffed almost 390 bills in his desk and not allowed debate or a vote……and many of those were bi-partisan and many even authored by Democrats. So something is going to happen……… unless Obama takes over the from Reid as the new Mr. Roadblock.

FredWednesday, November 5, 2014 at 7:12 pm

PS…..looking for a big rally in gold. Maybe as much as $100.

vincent passiatoreWednesday, November 5, 2014 at 8:48 pm

Just what is it with Gold and Silver … Every Day Gold and Silver goes Down ?? …I rememberhree years agoGoldwasover1450Dollarsand Silverwas over $350 .. Forcast after that said Gold would go over $ 5000.00 Dollars or more because the Economy was going to tank .. and Silver would hit over $350.00 Dollars …. is the good Goverment men and Wall Street have any thing to do with this …. our government is so corrupt along with Wall Street . ( Only the Wealthy Prosper )

Lawrence EkdahlWednesday, November 5, 2014 at 9:00 pm

I am happy the GOP won but I fear not much will change. They had the house for 2 years and did nothing. The GOP in the senate is so cowered by the president, I doubt any thing of value will be done. One can always hope. Our best hope is still to trust in the LORD and pray with out ceasing.

RUSS SMITHWednesday, November 5, 2014 at 9:08 pm

Hi!, Mike And Patrons Of Weiss Research Et. Al.:
I’m completely appalled at the number of people on a worldwide scale who are investing in a manner so as to keep the fiat money game afloat; especially here in the US when it should have never been allowed to be set afloat in the 1st place. Doesn’t anyone in the US know the major differences between specie and fiat profits anymore? For how long does the original values of any fiat profits extend into the future multi-generationally? All fiat profits in my mind even if they are into the quintillions of US $’s per hr. in anyone’s trading accounts no matter who are totally100% unconstitutional are they not; according to Article 1; Section 10 of OUR US Constitution? As my deceased mentor would have said were he here yet today: “you can take all the fiat profits whatever their amounts and shove them where the sun doesn’t shine and nail a board across it!!” He’s the guy who, when an insurance settlements claims officer offered him 70 paper $’s arranged to instead receive 70 Morgan Silver $’s he traded for $10 paper I owe you nothing Federal Reserve Notes each which gave him $700 fiat $’s by which to buy the new item for which he was being paid his insurance claim check. He used 300 silver $’s to buy a brand new Chevy pickup telling the DMV he paid a mere $300 for it; when they asked him what price he paid to put on his registration papers? So, I’m sorry guys but it doesn’t matter to me if you beat Mr. Buffett by 100 million percent they are still every one a fiat $ right? Worthless!!

Currency is just a means of exchange until it looses the confidence of the holder. When it is discovered that the $US is just the cleanest shirt in a pile of dirty laundry, then maybe precious metals will find a new home for investors. It would be nice to know the timing though, wouldn’t it?????

tomWednesday, November 5, 2014 at 9:49 pm

you seem to think gridlock will continue. maybe it will
‘but in my view if it does the gop will be voted out in 2 years.
I get the sense people are sick of the same old BS

Michael DavisThursday, November 6, 2014 at 12:58 am

Most all “investments” do not seem to be good right now.
Stocks are overvalued.
Bonds pay no return.
Maybe water rights, oil pipelines, farm land and forest land are good.
Gold is way down and might be good now.
I am just sitting on way too much cash right now and do not have any good answers as to the place to put it.
I am spending money expanding my business as my business is still doing good.

ClintThursday, November 6, 2014 at 11:32 am

In regard to Denton, they don’t want production increases afforded by fracking but they like the electricity generated by Natural gas because it’s safe and cheap. You can’t have your gas without fracking. Let them sit in the dark without natural gas and then re-vote. I’m glad that I understand fracking, former Haliburton Services engineer.

DaneagleMonday, November 10, 2014 at 8:45 pm

Well now that the GOP has some muscle why not push for impeachment ! Wouldn’t that solve the gridlock problem and put a good conservative in his place!

WaltFriday, November 21, 2014 at 12:57 pm

Every new law either costs us money or restricts our freedom. Gridlock is good.